The software-as-a-service (SaaS) industry is facing budget constraints and headcount reductions due to the pandemic and a widespread slowdown in technology. Companies have increased their budgets for SaaS acquisitions, looking to keep cash on hand as they grow more efficiently.
That’s why Kush Kela and Ahmed Sherif founded Vartana (which my colleague Mary recently covered). While working together at fleet management company Motiv, Kela and Sharif said they overcame the pain and problems caused by broken SaaS contract management and a rigid payment infrastructure. After years of looking at deals and failing due to a lack of payment flexibility, sales reps left the motivation to build Vartana to equip companies with a managed platform that helps close deals.
“Vartana is a win-win for sellers and buyers of SaaS services and hardware products,” Kela told TechCrunch in an email interview. “By offering buyers a variety of payment options and a simplified shopping experience, it gives buyers the best technology available to grow their business, giving them new tools to close contracts and generate cash through prepayment discounts.”
Vartana today announced that it has raised $12 million in a Series A round led by Mayfield with participation from Xerox Ventures, Flex Capital and Audacious Ventures, bringing its total raised to $19 million. Vartana has secured a $50 million credit line from i80 Group, ensuring that Kela’s funded deals can be managed through Vartana’s new capital marketplace.
” of Vartana Cmain market place, Vartana They no longer carry buyer’s debt on their books, which ensures a balance sheet-light business,” said Kela. “We are focused on strong and efficient growth. We’ve had strong success in the SaaS industry and are doubling down.
Vartana’s platform, which Kela refers to as a “sales closure” platform, is designed for use by resellers who combine business-to-business software, hardware, and hardware with SaaS software. Vartana helps manage tasks such as contract tracking, payment terms and signatures, accepting different payment options (e.g. full payment, deferred payment) and payment plans. Sellers can send multiple quotes at once and let buyers choose which payment method works for them. After payment is selected, the buyer can e-sign the agreement from the web or mobile, completing the agreement.
Through the primary marketplace, algorithms developed by Vartana normalize data, rate each buyer and extend debt financing offers. The platform matches buyer loan requests to a network of banks and lenders, allowing buyers to request funds and receive quotes in real time.
“Traditionally, when deals are funded through a bank or through the Vartana platform, sellers get paid on day one,” says Kela. “New undistributed cash flow is available for the full duration of the deal, sometimes up to five years, and buyers don’t need to pay upfront, meaning they can keep cash in their bank accounts and pay monthly payments to stay clean and ensure they can invest cash in the areas of their business that need it most.
Kela sees Vartana — which works with companies like Verkada, Samsara and Motiv and “dozens” of sales departments serving more than 10,000 buyers, he says — compared to startups including Ratio, Cashflow and Gynger. Ratio was particularly successful last September, raising $411 million in equity and debt. But he doesn’t see them as direct competitors, noting that Vartana’s model is based on delivering financing to buyers and targeting late-stage technology companies.
On the subject, Vartana recently launched a closing platform that allows sales reps to “market” financing and defer payments to any buyer. “This is especially important in a world where cash is king and companies are looking for ways to keep cash on hand,” Kela explained. “Offering self-financing as an option to all buyers helps buyers keep cash and pay for products over time and helps sellers get full contract value on day one.”
Kela did not respond to questions about Vartana’s income. But the company’s headcount grew 4x while financing volume grew 600% year-over-year. The plan is to increase the number of employees from 40 employees to 85 by the end of 2023.
Mayfield partner and Vartana investor Patrick Salyer added in an email: “In business-to-business enterprise software, time kills all deals. This is especially true during the deal closing process, when there is an alarming amount of delay and back-and-forth between the seller, buyer and financing teams, causing deals to be pushed into the next quarter or die all together. Vartana’s business-to-business enterprise sales closing and financing platform, a fully digital checkout platform with integrated proposals, signatures, payments and self-service financing, improving conversion, managing sales cycles, pricing and cash flow, brings this to fruition. The current economy.